Houses and Pylons Are Labour's Top Business Concerns

Labor’s overwhelming victory was also welcomed by bond market vigilantes as an incentive to rein in Conservative budgeteer Liz Truss’ reckless giveaway budget in 2022, punishable under Conservative administrations. Labor’s commitment to fiscal discipline — even to the point of dumping its previous flagship PS28bn policy on green investments for fear it might scare off potential investors — has been vindicated. Thus, one can understand why Britain has suddenly gained such favor from financial markets. International investors now know what they’re getting with UK investments – an established government keen to demonstrate its market-friendly credentials, falling inflation rates and imminent interest rate cuts are just among many indicators of its stability and promise. “UK government bonds (gilts) are attractive at current levels,” according to Peder Beck-Friis, an economist for Pimco, an enormous bond fund manager. Such factors help attract investors – something Rachel Reeves made clear throughout her campaign as chancellor-elect; their impact could potentially worsen long term growth and investment prospects. Here, Labour sets two ambitious pro-growth objectives that seem difficult to realize but which remain central to its plans: First, 1.5m homes must be completed across England and Wales over five years – this should make an important statement of intent from their plans for pro-growth measures. Second, Labour intends to decarbonise the electricity grid by 2030. On housing, Labour begins from an assumption of no more than 150,000 houses being completed annually – half its required annual quota for its five-year target score. Talk to executives working in the housebuilding sector and many believe the ministers would have achieved success if they can reach an annual run rate of 300,000. One factor they have direct control over is planning rules. Reeves has described the planning system as the main impediment to economic success in Britain and Keir Starmer has pledged that they will “dismantle” it. Therefore, any taboo against developing in green belt areas – at least those considered grey – will be challenged and may lead to projects being permitted within them. Assume local authorities will receive mandatory housebuilding targets as a first step, along with funds to pay planning officers. Still, 1.5m housebuilder target may prove ambitious: supply chains cannot simply be turned back on at government request. Labour’s demand for more affordable houses within its housing mix may cause tension with private-sector housebuilders who now dominate the market far more than during its previous peak of house building activity – in the 1970s. Labor hopes to double onshore wind capacity, triple solar capacity and quadruple offshore wind capacity by 2030. Photograph by Spencer Bowman/GettyOn energy infrastructure reform, there exists at least an outline for change. Nick Winser, the electricity commissioner, submitted his report to the previous government last August but this task looms large even with their ambitious target date set at 2035. “Greece will require four times as much new transmission infrastructure in seven years than it had since 1990,” according to Winser’s report. Blockages caused by allocating hookups for new wind, solar and battery storage projects through “first come, first served” processes are among the biggest impediments to progress in Great Britain. Some developers have been waiting up to 15 years for power production. There is growing concern that operators who specialize in selling on connection rather than building infrastructure themselves could manipulate the system and sell power illegally. Ofgem has implemented rules designed to tackle these “zombie” schemes but, again, that process takes time. Skip past newsletter promotionSign up for Business TodayGet ready for an action-packed business day ahead with all of the news and analysis you need every morning To obtain more details please view our Privacy Policy. Google ReCaptcha helps protect our website, and their Privacy Policies and Terms of Service apply accordingly. Now consider Labour’s ambition for renewable generation: double onshore wind capacity by 2030; increase solar panel production threefold and quadruple offshore wind. Great British Energy – the state-owned entity which will collaborate with local authorities on local power schemes as well as with private sectors in developing advanced technologies like floating off-shore wind energy – may take more time than anticipated to establish itself. Even Labour’s capitalisation of PS8.3bn over parliament life does not appear to be gamechanging money when National Grid intends to invest PS30bn during that same timeframe, according to analysts at Jefferies investment bank. Analysts also noted that “Labour’s aim of having a net zero grid by 2030 appears unattainable despite steady progress”. One energy expert they consulted came to the conclusion that, even with perfect execution of each planned project and linear interconnector growth and low electricity demand levels, the new government would miss its 2030 growth ambition by 25 percent. It remains one of the central manifesto pledges but may prove difficult.